A technology-stock rout tied to faltering confidence in the AI trade is testing global financial markets, with volatility and credit stress rising. Bond and funding markets remain orderly, while the VIX has surged more than 40% this week.
The Nasdaq 100 rose nearly 2% on Friday after falling more than 6% on Thursday, but traders remained on edge. The VIX climbed above 28 on Thursday, its highest level since late March, and was near that level on Friday; it has risen more than 40% this week.
Credit default swap spreads on neocloud firm CoreWeave surged past 1,000 basis points to record highs, while spreads on SpaceX and Intel also rose this week. The premium on US high-yield corporate credit reached its highest level since the Liberation Day market turmoil, and premiums for the riskiest-rated companies were around their highest since 2020.
US 10-year Treasury yields have fallen 50 basis points from peaks above 5% last month, and cash funds saw a $140 billion inflow in the week to Wednesday. The MOVE index, which tracks US Treasury market volatility, has slipped back from its October six-month high, while swap spreads have remained calm.
